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Canada (specifically Kahnawake) the world's third largest online gambling centre

The Toronto Star carried an interesting article on the UK government report submitted to the recent 32-nation Remote Gaming Summit, remarking that although a representative from the Quebec province was believed to have been present, there was no Canadian federal government delegation.

The newspaper suggests that Canada could come under pressure to outline a stance on online gambling as Britain pushes countries around the world to regulate, while the United States moves toward outlawing it.

The Star refers to research by RSe Consultancy that was commissioned by the British government prior to the Summit, which sought to develop a common and consistent approach to the regulation rather than banning of Internet gambling.

According to the research report, there are about 2 300 Internet gambling sites across the world, reported the Star. When it comes to licensing jurisdictions, Antigua leads the way, with 537, followed by Costa Rica, with 474 and Canada's Kahnawake reserve, with 401.

One of the report's sources was a 2004 report by the Canadian Centre on Substance Abuse's national policy group, titled Internet Gambling in Canada Waits in Legal Purgatory. The report said "this issue deserves consideration given the rate of Internet expansion, coupled with a growing concern over Canadian gambling in general."

Internet gambling sites take millions of dollars in bets from Canadian citizens, it said.

"The loss of government revenues to international companies, compounded by the possibility of land-based casinos forfeiting profits to online gaming, is a concern," the report said.

In 1996 Dennis Mills, a federal member of the Canadian Parliament, introduced a bill to amend the Criminal Code to permit the regulation of Internet gambling by federal authorities, but it did not pass, the report said.

The 2004 report also said that while Loto-Quebec and Canada's attorney general have deemed a casino operated by the Kahnawake Mohawks illegal, no charges had been laid.

The Kahnawake Mohawks say that under the Constitution, "which is the highest law in this land, that they have a right that is integral to their culture, that gaming was an essential part of their culture," a prominent lawyer is quoted as saying.

Michael Lipton, a Toronto lawyer specialising in gaming law, said "...twelve years ago, this industry wasn't alive. It's now about $14 billion U.S. This is an industry that certainly cries out for regulation," he said, adding "...that would also give rise to a fairly significant amount of tax revenue."

The British approach differs from that of the United States, which has tried to use the banking system to choke off the flow of funds relating to illegal gambling, Lipton said. "The United States seems to be going in an opposite direction to what the United Kingdom is doing," he said. "The United States doesn't want its citizens to involve themselves in online gambling."

The federal government effectively transferred the operation of all gambling to the provinces at the time of the Calgary Olympics, in return for payment, Lipton said, but because "gambling falls under criminal law, the laws that are made in respect to this area must come under the federal government."

Similarly, Ottawa is responsible for banking, and so it would be up to the federal government to move toward prohibition in the way the United States has.

Proponents of regulation argue that the rules would bring in taxes and that, rather than prohibit online gambling, governments should keep the industry above board so that minors would be restricted and gamblers could have more faith that sites are safe and secure.

Those in favour of prohibition argue that Internet gambling is currently drawing in the underaged, gambling addicts and organised crime.

According to the report, online gambling has more than doubled in the last five years (see previous InfoPowa reports).

"This research shows that online gambling is on the rise and there is a need to do something about this at a global level, as well as in the U.K.," the UK Culture Secretary, Tessa Jowell suggested to delegates at the Summit.

"However good the new regime will be in the U.K. for online gambling, it might not be as effective if overseas websites simply ignore the high standards we have set," John Carr, new technology adviser for children's charity NCH, stated in a press release from Jowell's office.

The Americans have a a different view. The Star quotes from an email sent by Carolyn Weyforth, spokesperson for Bill Frist, the senate majority leader who rushed through the U.S. legislation, who said the new legislation is to "simply put a mechanism in place to enforce existing laws that already made online gambling illegal."

"The United States is a nation founded on the rule of law," Weyforth said in an email to the Star. "We cannot allow companies to flagrantly ignore our laws just because they are based overseas. Shareholders in corporations that were betting on U.S. authorities looking the other way in the face of illegal conduct have every reason to be upset it was a bad bet and they lost big."

Last month, Ontario Government Services Minister Gerry Phillips introduced a bill that would ban all advertising of Internet gambling (see previous InfoPOwa reports).

The Star says that revenues at the province's Ontario Lotteries and Gaming Corp., which operates land casinos, have dropped more than $300 million in three years, though it's not known how much of that is because of competition from Internet gambling. And Ontario's horse racing industry fears Internet gambling as a threat to its viability.

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